Genard v. Hosmer

• Decision Date: 15 February 1934
• Citation: 285 Mass. 259,189 N.E. 46
• Parties: GENARD v. HOSMER et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

285 Mass. 259

189 N.E. 46

GENARD

v.HOSMER et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Feb. 15, 1934.

Exceptions from Superior Court, Suffolk County; W. D. Gray, Judge.

Action of contract by Daniel E. Genard against Ralph H. Hosmer and another. A general finding was made in favor of the defendants, and the plaintiff brings exceptions.

Exceptions overruled.

P. M. Lewis, of Boston, for plaintiff.

Henry F. Wood, of Boston, for defendants.

RUGG, Chief Justice.

This is an action of contract. The cause of action is the alleged breach of a covenant in an assignment given by the defendants to the plaintiff. There were two hearings before the same judge of the Superior Court, who made findings and rulings. The evidence is not reported in full and the bill of exceptions does not purport to contain a summary of it all; therefore the findings of fact must be accepted as true. The pertinent facts thus displayed are that at the time of the assignment, June 1, 1922, the defendants (hereafter called the Hosmers) were plaintiffs in an action pending in a court in Texas against the New York Buyers Association to recover losses sustained by paying a draft with bill of lading attached covering a carload of eggs, the amount of the claim being $2,550.62. The Texas court had jurisdiction of all parties to that action. The Hosmers executed and delivered to the plaintiff an assignment of that claim and cause of action pending in the Texas court for the sum of $1,000, which was paid. That assignment gave to the plaintiff full right, but at his own expense, to prosecute the cause of action and enforce judgment in the Texas court in the names of the Hosmers and contained this clause: ‘But it is understood we do not guarantee the payment of said claim or any part thereof, and this assignment is made without recourse, and the only covenant we make is that said claim is a just and legal demand, and no part of it has been paid.’ The Texas attorney who had brought the action for the Hosmers ceased to act for them after the assignment but continued to prosecute the action in their names in behalf and for the benefit of the plaintiff in the case at bar, who assumed full control and direction of the case. At no time thereafter was opportunity to prosecute the case expressly or impliedly offered to the Hosmers. Depositions of the Hosmers were taken and used at the trial in Texas. They sold their claim with a face value in excess of $2,500 to the plaintiff for $1,000 because, thereafter, they were to have no further expense and trouble in connection with it. The trial court in Texas found for the defendant in that action and the plaintiff (as set forth in the exceptions) ‘appealed-first to the Court of Civil Appeals * * * and thereafter to the Supreme Court of Texas,’ but was unsuccessful in both appeals. (The only Texas decision to which our attention has been directed is Hosmer v. New York Buyers' Association, 258 S. W. 853, by the Texas Court of Civil Appeals.) Subject to the exception of the plaintiff, one of the Hosmers gave testimony, which is not reported, to show that the claim assigned to the plaintiff was a just and legal demand.

The trial judge in the case at bar found that, at the time of the assignment, (1) the Hosmers had a claim against the New York Buyers Association growing out of the losses sustained by them by reason of paying the draft in general as set forth in the assignment; (2) the claim was a just and legal demand against the New York Buyers Association, and (3) no part of the claim had been paid. ‘In other words' he found ‘as a fact that there was no breach of the covenant in the assignment now relied upon by’ the plaintiff. A general finding was made for the defendants.

The case at bar is an action on a covenant contained in an assignment to the plaintiff by the Hosmers of a ‘claim and demand’ definitely described by reference to a pending action in a court of Texas. That covenant, so far as now in controversy, is that ‘said claim is a just and legal demand.’ The assignment contains no definition of those words. It specifies no way to ascertain their meaning. It names no tribunal by which their meaning shall be adjudicated. That must be determined by the court in which the covenant is litigated. The right meaning of the words of the covenant must be interpreted in the light of the subject matter to which they are applied and the relations of the parties to it and to each other. The subject matter of this assignment was a claim which was disputed, as all the parties knew. The one owing it had refused to pay it and the Hosmers had been obliged to bring an action in the court of a distant State to enforce collection. The plaintiff as assignee was a resident of that State. The consideration paid by the plaintiff for the assignment was less than fifty per cent of the face value of the claim. Manifestly all parties intended that the assignee was to take some risks and if successful was to reap a considerable profit. It was in substance and effect the assignment of a pending lawsuit. The assignment is unequivocal to the point that it ‘is made without recourse’ and that the Hosmers do not guarantee the payment of the whole or any part of the claim, and that their ‘only covenant’ is that the claim is just and legal. That covenant is to be read in the light of its context and of the assignment as a whole. One purpose of the assignment was to transfer to the plaintiff as assignee the responsibility and expense of prosecuting that lawsuit to its conclusion and to relieve the Hosmers of those burdens. That is clear from the clause conferring these rights upon the plaintiff. The covenant did not go so far as to cover any aspect of the trial of the pending action on that claim. That was left wholly to the plaintiff. It not infrequently happens that a just and legal demand fails to prevail upon a trial. The contention of the plaintiff in substance and effect is that the covenant is the equivalent of a warranty that judgment will be entered in the Texas court for the amount of the claim. The covenant is not couched in terms of a warranty that judgment will be entered for the amount of the claim and demand, or for any amount. A covenant of that nature would have been simple to phrase if that had been the intent of the parties. It is significant that phraseology of that nature was not adopted by the parties to this covenant. The covenant contains no intimation that whether the claim is a just and legal demand shall depend upon the decision of the lawsuit pending in the Texas court. The assignment as a whole does not require such an inference as to the intention of the parties. It is not susceptible of that construction. Since the assignment transferred control and expense of the conduct of the lawsuit to the plaintiff as assignee, the Hosmers as assignors assumed by their covenant no obligation that all the necessary and desirable witnesses would be called to testify at the trial, or that all the necessary and desirable evidence would be produced. The...